Spending by French consumers is falling while inflation is accelerating, data showed on Tuesday, adding to concerns about the strength of the economic recovery as the pandemic drags on.

Household consumption fell by 2.2 per cent in July from the previous month after a modest monthly rise in June, the national statistics agency INSEE said in a regular report.

The data, which correct for inflation and seasonal variations, found a 2.9-per cent drop in spending on food and a 2.7 per cent drop on manufactured goods. Decreased spending on clothing and durable goods wiped out gains registered the previous month. Spending on energy, meanwhile, rose by 1.0 per cent.

A separate report by INSEE found that a surge in energy prices played a role in the acceleration of 12-month inflation to 1.9 per cent in August from 1.2 per cent in July.

Food and energy prices posted the sharpest increases, while sales of goods also rose as the French summer sale period ended in July.

Using the EU’s standard measure of consumer price inflation, the HICP, French inflation rose to 2.4 per cent in August from 1.5 per cent in July.

French inflation rose to 2.4% in August from 1.5% in July

The European Central Bank defines price stability as inflation rates of just below 2.0 per cent, but is willing to tolerate temporary over- or undershooting of that level before stepping in.

Meanwhile, INSEE revised its figure for second quarter economic growth to 1.1 per cent, from its initial estimate of 0.9 per cent. While the upward revision will certainly be welcomed, the latest data will be cause for concern as consumer spending is the main driver of the French economy.

Inflation has also been a worry as it could push the ECB to wind down its support for the economy, even as part of the price rises going forward may be due to pandemic-related shortages of goods.